The British pound is lower against the Swiss franc on Wednesday as investors continue to flock into haven currencies amid uncertainty about the government response to the coronavirus pandemic. The Swiss franc has reached its strongest against the pound since the Swiss National Bank unexpectedly removed the peg against the euro in 2015.
GBP/CHF was down by 50 pips (-0.45%) to 1.1527 with a daily range of 1.1525 to 1.1540 as of 9am GMT.
GBP/CHF slid below 1.16 where it spent much of Tuesday to a new 5-year low just above 1.15. The currency pair has lost -1.20% this week, and almost 10% in the last month.
Pound not getting any lift from ‘unprecedented’ UK stimulus
UK, Swiss as well as other European and US lawmakers are taking drastic action to combat the spread of the coronavirus but also limit the impact on the economy. In Tuesday’s press conference UK Chancellor Rishi Sunak announced a new set of economic stimulus measures that he described as ‘unprecedented’
The UK Treasury will offer £330 billion in government-backed loans and has agreed an arrangement with the Bank of England to buy commercial paper from big businesses to inject capital. Households affected by layoffs or reduced work hours will get tax relief and a mortgage holiday.
Swiss franc
Bad news about the coronavirus is translating to Swiss franc strength and there appears to be little that Swiss central bankers can do about it. The latest surge into the franc can partly be explained by rumours that there are plans to stop trading in financial markets. A safe place to put your investment capital is a much bigger priority than returns in the current market turmoil.
The EU will close its external borders including to Switzerland and the United Kingdom, in a likely hit to trade in goods and services that was already grinding to halt. Although national governments are stepping up their economic stimulus efforts, they are also taking more draconian measures to contain the virus and investors want their money safe.
